So a recap:
- A half-assed pension reform bill was crammed through the Kentucky legislature, signed by the governor
- The governor vetoed a separate bill, that would have allowed municipalities to put off paying down the unfunded pension liability
- Kentucky is screwed

The short story:
- Nobody likes Gov. Andrew Cuomo, because he’s an asshole
- Cuomo is getting scared shitless because a leftist some NY Democrats actually like is running against him in the Dem primary
- Other NY politicians are probably also vulnerable

The story:
- Colorado has had the usual mix of underfunding, sunny valuation assumptions, yadda yadda
- Some of the state plans are less than 60% funded
- The state legislature has passed some mish-mosh to try to pay down the unfunded liability and slow the increase in benefits… except for that part where they lowered the retirement age to 60 (wtf)

Of course, reality doesn’t care about what you want. It would have been a good idea to have done something about that in all the years of low funded status (this isn’t new) and underpayment (but 80% is enough! Everybody knows that!)

The original graph is an interactive (which is really unnecessary – they could have put both pieces of info on the map), which gives the actual average + the overall funded ratio for the state.

I will give you time to contemplate what is wrong with this graph.

In the meanwhile, consider this beauty:

Second, the majority of that income isn’t supplied by taxpayers at all. Between 1993 and 2014, about 64% of pension funding came from investment earnings, according to Census Bureau data.

THAT’S NOTPENSIONFUNDING.

It’s pension cash flows.

ALL of the pension funding comes from taxpayers, by definition — okay, some of it may have come from bonds as well. Even the “employee contributions” to state pensions come from the taxpayers (and bond buyers). I’ll let you think through how that works.

The investment cash flows are there only to the extent that prior taxpayer contributions (fine, and bond sales) went into the bucket to be invested.

The pension funding is based on the assumption that the contributions will pile up to get all sorts of high
investment returns… which hasn’t been happening in the past decade.

But back to the map: do you see the problem?

I’ll show you something from a prior blog post — looking at what the pension benefits looked like for Chicago Teachers in 2014:

This is what we find: most participants have 30-40 years of services, and average pensions are around $61K – $68K in that range. Unsurprisingly, the average increases with years of service.

What’s the average for the overall group? $49K

I also looked at Chicago LABF (not going to graph) — the average annual benefit for the whole group was $33K, but if I restricted it to having over 30 years of service, the average was $46K.

Now, none of us are concerned that those who work a larger # of years get higher pensions. But if we are averaging the whole group, that “average pension” includes people who worked only 10-15 years. I would hope such people had accrued retirement benefits/savings elsewhere, during their full working lifetime.

So no, the average pension benefit being paid is a meaningless number, just as the 64% of public pension positive cash flows came from investment. Give me the average for those working 30+ years (and even 30 is low, in my opinion).